HT-2020-000448 - [2024] EWHC 1185 (TCC)

I have found, in relation to equivalent items from the Updated Schedule of Loss items 3 and 11, that the presentation of DBS’s loss of anticipated savings claim is flawed and cannot be relied upon as a ‘best estimate’ of the losses sustained by those breaches which led to efficiency savings not having been realised.

This remains the case in respect of the aggregated claim presented under Updated Schedule of Loss. The WFPM is not a reliable basis for a claim. Moreover, having accepted that there are performance and other issues which would be wrapped up in DBS’s starting point calculation, there remains no evidential basis upon which the Court could rationally and reliably identify an appropriate adjustment to the claim to reflect this. Whilst a court will seek to arrive at the ‘best estimate’ it can when dealing with a head of loss which necessarily includes hypotheticals, for the reasons I have identified, this is not to be equated with guessing. Some rational and evidence based estimate could have been presented in order to gauge what part of the overall loss of efficiency identified could fairly be attributed to the different breaches identified, and which to the matters which even on DBS’s case do not give rise to a claim. This problem is obviously exacerbated where, as here, some breaches claimed against TCS which are said to have given rise to claimed inefficiencies have not succeeded.

Perhaps in partial recognition of the difficulties DBS’s aggregated claim faced, DBS presented in its Written Closing Submissions, for the first time, a calculation of loss which it said could be attributed to workarounds caused by specific breaches. DBS contends that of the aggregate claim pleaded and supported by Mr Hain on the basis of the cost of FTEs, it is possible to attribute some identifiable part to the staff time lost in operating ‘workarounds’. It calculates this sum as £498,092.17.

In its oral Closing submissions, Mr Lavy submitted that it was far too late for DBS to try and calculate a loss on this basis, pointing out that DBS had never previously sought to rely on its workaround spreadsheet as a basis for quantifying loss. Mr Lavy pointed out that workarounds were specifically addressed on the pleadings, and DBS effectively disavowed the need to provide the particularity sought.

At paragraph 115.12 and the Amended Schedule of Loss item 24 (the item with which I am presently concerned), TCS pleaded in its Reply:

There was a related Request for Further Information, in respect of which TCS complained about the adequacy of response, and generated a second Request. This asked at Request 33:

The Response indicated that the pleading was adequate and the request sought a level of detail which was not necessary to enable TCS to prepare its case or understand the case it had to meet.

Request 37 is also relevant, in that it asked in relation to the aggregated losses claimed at Item 24 what proportion was attributed to the matters set out in paragraph 115.11 of the Amended Defence and Counterclaim i.e. the 27 workarounds, and how that was calculated. DBS responded:

The case TCS had to meet, therefore, was one in which, notwithstanding having been given the opportunity properly to particularise a case linking breach to workaround to loss, DBS averred was based solely on the aggregated loss.

I accept Mr Lavy’s submission that to advance a calculation attempting to link losses to the workaround schedule for the first time in Closing Submissions is plainly too late. TCS was entitled to understand in advance of trial (at the latest) any claim by which DBS sought to link a particular loss to a particular breach. TCS would be prejudiced if this claim were allowed to be advanced after the evidence closed. As Mr Lavy observed correctly, TCS's factual cross-examination on the workarounds spreadsheet was aimed at showing that DBS could and should have done a proper analysis rather than advance its global claim for efficiencies. There was no cross-examination to test, for example, the FTE assessments in the workarounds, how they were arrived at and how reliable they were (or were not). I accept that this is because there did not need to be in circumstances where there was no quantified claim. Similarly, it seems to me that there would likely be exploration of precise durations of instituted workarounds, and the reasons why certain workarounds have stayed in place. In fairness to Mr Croall, his oral reply closing submissions addressing this complaint acknowledged Mr Lavy’s point about what may have been cross-examined on and did not seek to suggest Mr Lavy’s submission was misplaced.

In the circumstances, TCS would suffer obvious prejudice if DBS were entitled to advance the particularised workaround claim in its Closing Submissions.

Finally, I note, however, that the (late) quantification of the claim throws the broader claim into even sharper relief. First, it shows that there had been ways of working from specific breaches rationally to quantify losses attributable to those breaches. In these circumstances, an aggregated approach is not the ‘best estimate’ of loss in these circumstances. Second, (and taking DBS’s workaround spreadsheet at face value) it highlights that of all the workarounds being put in place just 14.5% of time attributable to workarounds was attributed by Dr Hunt in her Appendix 12 to an identifiable breach relevant to item 24.

For all these reasons, DBS’s Counterclaim for lost inefficiencies at item 24 of the Updated Schedule of Loss fails.